Kerala GST Advance Ruling on Demo Car Sales Withdrawn
The Authority for Advance Ruling dismissed the request regarding demo car tax treatment because the applicant withdrew their application.
- Ruling
- ORDER No.CT/779/18-C3 DATED 26/03/2018
- Dated
- 26 Mar 2018
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Popular Motor World asked about GST Rule 32(5) for demo cars.
- The applicant requested to withdraw their application before a decision.
- The Authority dismissed the case without providing a ruling.
- No guidance exists from this order regarding demo car tax.
In short
The company asked the Authority for Advance Ruling (AAR) in Kerala to clarify how to calculate GST on the sale of demo cars under Rule 32(5). Before the authority could decide, the company asked to withdraw their request.
What has changed
How it worked before
Businesses were uncertain if selling used demo cars should be taxed on the full sale price or only on the profit margin under Rule 32(5).
What has changed
Nothing changed because the authority did not issue a decision. This order provides no guidance on how to tax demo car sales.
Who this affects
Car dealerships and motor vehicle retailers who sell demo or display vehicles.
An example
Imagine a car dealer in Kochi wants to know if they can pay GST only on the profit margin when selling a demo car. They might look at this order hoping for an answer. However, because the applicant withdrew their request, the dealer will find no guidance here and must consult their own tax advisor.
What you should do
Do not rely on this order for your tax planning. An advance ruling only binds the specific business that asked for it, and since this case was withdrawn, it offers no legal precedent for anyone.
If you do nothing
If you assume this order supports a specific tax treatment, you risk miscalculating your GST liability. A tax officer may disagree with your interpretation, leading to interest, penalties, and costly disputes. Always seek professional advice based on current law rather than withdrawn applications.
The terms explained
- Advance Ruling
- A written decision from tax authorities that clarifies how GST laws apply to a specific business transaction.
- Rule 32(5)
- A specific GST rule that explains how to calculate the tax value when selling second-hand goods.
- Demo cars
- Vehicles used by a dealership for customer test drives and showroom displays before being sold as used cars.
The ruling in detail
Authority for Advance Ruling
M/s. Popular Motor World (P) Ltd.
ORDER No.CT/779/18-C3 DATED 26/03/2018 · Keralam
Questions before the authority
- Whether the sale of 'demo cars' will fall under Rule 32(5) of the GST Rules, 2017.
Facts
The applicant is a company dealing in motor vehicles and is an authorized dealer for Hyundai motor cars in the State of Kerala. They initially sought an advance ruling regarding the applicability of Rule 32(5) of the GST Rules, 2017, to the sale of their 'demo cars'.
Ruling
The Authority for Advance Ruling dismissed the application as withdrawn, as the applicant requested permission to withdraw their request.
Reasoning
The applicant filed a letter dated 12.03.2018 requesting the withdrawal of their application for an advance ruling. Consequently, the Authority did not deliberate on the merits of the question regarding Rule 32(5) and dismissed the application as withdrawn.
Provisions relied on
- Rule 32(5) of the GST Rules, 2017
- Section 98 of the Goods and Services Tax Act, 2017
For the practitioner
This order provides no substantive guidance on the tax treatment of demo cars. It serves only as a procedural record that the applicant chose to **withdraw their request** before a ruling could be issued.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/kerala-ct_779-18-c3-pmwpl.pdf
Legibility of the scan, as read: high.
Prepared 16-10-2026.
About Patron Accounting LLP
Patron Accounting LLP is a CA and CS-led accounting and compliance firm that has been working with businesses across India since 2019. We handle the work that keeps a company correct with every department it answers to: day-to-day bookkeeping and accounting, GST registration and returns, income tax filing and assessments, TDS, payroll and PF/ESI, company and LLP incorporation, ROC and MCA compliance, statutory and internal audit, physical stock and inventory audits, trademark and other registrations, and the certificates and reports that banks, buyers and regulators ask for.
Our clients range from a first proprietorship registering for GST to established companies running operations across several states. Much of our work is exactly this: reading what a department has published and telling a business, in plain terms, whether it changes anything for them.
We operate from five offices and serve clients across the rest of India remotely:
- Pune (HQ): RTC Silver, B4-708, Sai Satyam Park, Wagholi, Pune, Maharashtra 412207
- Mumbai: 104, Rajshila Building, 597 J.S.S. Road, Marine Lines, Mumbai 400002
- Delhi: 3rd Floor, B-6/154-155, Sector 5, Rohini, Delhi 110085
- Gurugram: Pioneer Urban Square, B109, Golf Course Ext Road, Sector 62, Gurugram 122098
- Ahmedabad: Phoenix Tower, 1107, near Commerce Six Road, Drive In Road, Navrangpura, Ahmedabad, Gujarat 380009
If anything on this page affects you and you would like somebody to look at your own position, we are glad to help. Call +91 94594 56700, write to sales@patronaccounting.com, or visit patronaccounting.com. The first conversation costs nothing.